Further consolidation in the life science industry, especially the bioprocessing space, contributed to a third consecutive year with a mega transaction valued at more than $13 billion. Following Thermo Fisher Scientific’s $15.8 billion (including debt) purchase of Life Technologies (see IBO 4/15/13) and Merck KGaA’s $17.0 billion deal for Sigma-Aldrich (see IBO 9/30/14), Danaher acquired Pall for $13.8 billion in 2015 (see IBO 5/15/15). These acquisitions reflect a strategic shift towards the pharmaceutical and biopharmaceutical end-markets, while leveraging scale and breadth of products in these high-growth markets.

Overall, merger and acquisition (M&A) activity in the analytical instrument and laboratory product–related industry, while steady, abated in 2015 compared to the previous year (see IBO 11/15/14). This decline can be attributed to economic uncertainty, fluctuating share prices and valuation concerns. Nevertheless, a favorable lending environment and pressure to increase shareholder value triggered a number of strategic acquisitions for technological capabilities, and market share and customer expansion. Furthermore, aside from bioprocessing, a number of companies focused M&A activity around higher growth areas of genomics and sequencing, pharmaceutical research and applied markets such as food testing.

IBO’s annual summary of M&A in the analytical instrument and lab product–related markets is comprised of deals announced in IBO between November 30, 2014, and November 15, 2015. The article and tables are based on publicly available information.

Danaher’s purchase of Pall—its largest transaction to date, easily surpassing its 2011 purchase of Beckman Coulter for $6.8 billion (see IBO 2/15/11)—not only gave the company entry into the filtration and separations market, but significantly expanded its exposure to the biopharmaceutical market, nearly doubling its reach to pharmaceutical customers. While the transaction comes at a steep premium of 22x EBITDA, Danaher projected $300 million in cost synergies and plans to spin off its industrial-focused businesses (see IBO 5/15/15). Prior to being acquired, Pall added to its downstream bioprocessing portfolio with the purchase of Tarpon Biosystems’ simulated moving bed technology (see IBO 4/15/15).

Thermo and Sartorius also focused on bioprocessing. Thermo, which was reported to have bid for Pall (see IBO 5/15/15), expanded its customized single-use solutions via the acquisition of Advanced Scientific (see IBO 2/15/15). Similarly, Sartorius picked up two small companies, diversifying its bioprocessing business into services with the purchases of BioOutsource for €30.6 million ($32.9 million = €0.93 = $1) (see table, page 8) and Cellca for €26.5 million ($29.4 million = €0.90 = $1).

In spite of Thermo’s ongoing M&A strategy to increase shareholder value, the company is returning to a more normalized capital deployment strategy. From 2010 to 2014, the company spent $25 billion in capital, of which 83% was designated for acquisitions. For the first nine months of 2015, it deployed $1.4 billion in capital, including 51%, 36% and 13% for acquisitions, buybacks and dividends, respectively.

Agilent Technologies, which was speculated to have been a possible acquisition target for Danaher, also broadened its reach in biopharmaceutical markets. Agilent added a new technology platform through the purchase of Seahorse Bioscience (see IBO 9/15/15), a provider of cell metabolism measurement systems and kits. The company also continued to build its clinical, microarray and NGS businesses by purchasing genomics software firm Cartagenia (see IBO 5/15/15) .

Acquisitions by other large analytical instrument and laboratory product–related companies were relatively targeted. PerkinElmer focused on the fast growing food testing market with its acquisitions of Perten Instruments (see IBO 11/30/15) and Torion (see IBO 6/30/15), expanding its portfolio for applied markets to include process analytical systems and portable GC/MS, respectively. The company also acquired two other undisclosed companies this year, according to its third quarter SEC filing.

The largest premium paid was by Fujifilm for its purchase of Cellular Dynamics (see IBO 3/15/15), as the company sought to grow its iPSC capabilities, including iPSCs for drug discovery research. While many of Cellular’s shareholders criticized the deal, it was liquidity issues due to looming debt obligations that likely forced the sale. For Fujifilm, the deal has already proven to be financially beneficial, as Cellular signed an $83 million iPSC supply and licensing pact with Roche in November.

Similar to Agilent and Fujifilm, targeting new technologies and intellectual property was also a motive for several transactions this year. Abcam acquired a novel multiplex assay platform via the purchase of Firefly BioWorks to expand its offerings for biomarker detection and biological research (see IBO 1/31/15). Through the acquisition of AxioMx (see page 2), it also added new technologies to produce recombinant monoclonal antibodies targeted by diagnostic and therapeutic research customers. Horizon Discovery acquired Haplogen Genomics, which broadened the company’s inventory of engineered human cell lines, especially at a more conducive price point for academic research customers (see IBO 1/15/15).

The sequencing market again garnered significant M&A activity as companies continued to focus on integrated workflow solutions involving sample processing, library preparation and informatics. Roche entered the genomics informatics market via the purchase of Bina Technologies, which also gives it new data management opportunities in the fast growing area of translational research (see IBO 12/31/14). For NGS library preparation, Roche acquired protein engineering technology through the purchase of Kapa Biosystems (see IBO 8/31/15). Also for NGS sample preparation, the company acquired Lumora’s nucleic acid purification technology (see IBO 8/31/15). QIAGEN acquired the enzyme solutions unit of Enzymatics (see IBO 1/15/15), not only building upon its own integrated NGS workflow but strengthening its offering of universal NGS products.

Similar to Agilent and Roche, Illumina extended its NGS software offering with the purchase of GenoLogics Life Sciences Software (see IBO 8/15/15). Meanwhile, one of Illumina’s HiSeq X customers, WuXi PharmaTech, also strengthened its NGS informatics capabilities for biopharmaceutical research and personalized healthcare with the purchase of NextCODE Health (see IBO 1/15/15). In an effort to grow its genomics business, especially for NGS workflows, Becton Dickinson’s Life Sciences segment acquired Cellular Research (see IBO 8/31/15), a provider of sample preparation for single-cell genomics analysis.

In addition to PerkinElmer, other companies expanded their offerings for food testing applications. Union Park Capital acquired Unity Scientific, which offers NIR system for QC in food and dairy markets, as well as chemical and pharmaceutical industries (see IBO 9/15/15). BioMérieux purchased CEERAM, which broadened its pathogen testing solutions portfolio by adding PCR kits for detection of foodborne viruses (see IBO 1/31/15). And dedicated food safety testing firm Neogen followed through with its global expansion. The company strengthened its direct presence in China with the acquisition of distributor Beijing Anapure BioScientific (see IBO 12/15/14), and established a presence in India with the purchase of a food testing laboratory, Sterling Test House (see IBO 6/15/15). The company also acquired UK-based Lab M, which supports its microbiology offering (see IBO 8/31/15).

Similar to Neogen, other companies capitalized on their global expansion strategies through M&A. Spectris acquired a Taiwanese distributor for its particle measuring business (see IBO 7/15/15). Thermo announced the acquisition of two channel partners covering Singapore, Malaysia and South Korea to expand its analytical instrument presence in Asia (see IBO 6/15/15). Phenomenex acquired its Spanish distribution partner, Micron Analytica (see IBO 8/15/15).

The emergence of Chinese foreign direct investment was evident in the industry as two Chinese companies made strategic acquisitions to expand in the US as well as strengthen product offerings domestically. Bohui Innovation Technology purchased MS provider Advion (see IBO 6/15/15) and Valiant acquired MP Biomedicals, a supplier of chemicals and lab products (see IBO 10/31/15).

In spite of high market valuations, private equity firms showed stronger M&A participation this year than in 2014. One Equity Partners significantly expanded its presence in the life science and lab products sector using a buy-and-build strategy. The private equity firm acquired two established providers of laboratory glassware, Duran (see IBO 12/15/14) and Wheaton (see IBO 9/15/15).

Other private equity firms investing in analytical instrumentation included Main Line Equity Partners, which bought Cianflone Scientific Instruments, a provider of XRF systems (see IBO 4/30/15). Foresight and company management acquired Specac, a supplier of spectroscopic accessories (see IBO 4/30/15). Ampersand Capital Partners purchased Protein Technologies, a provider of peptide synthesis instrumentation (see IBO 6/30/15).

This year’s divestments were spurred by strategic motives to improve financial performance. Agilent divested its x-ray diffraction business to Rigaku (see IBO 3/31/15) in a restructuring effort to improve revenue growth and profitability. Sartorius Stedim Biotech sold its noncore Industrial Technologies Division to Minebea (see IBO 12/31/14).

For Transgenomics, the divestments of its IC product line (see IBO 9/15/15) and Genetic Assays & Platforms business (see IBO 9/30/15) served to raise money for commercializing of its MX-ICP technology.

To comply with the EU’s antitrust requirements for its purchase of Sigma-Aldrich, Merck agreed to sell Sigma’s laboratory research chemical business to Honeywell (see IBO 10/31/15). The sale was one of multiple laboratory chemical transactions this year, as Thermo purchased Alfa Aesar (see IBO 6/30/15). VWR continued its string of acquisitions, investing a total of $55.6 million through the third quarter to acquire biochemical supplier National Biochemicals (see IBO 2/15/15) and, with a focus on LC products, Hichrom (see IBO 5/15/15). Expanding both its lab chemicals and LC-related products, VWR purchased solvent supplier Purification Technologies last month (see IBO 10/15/15).